Twenty-two ideas reached the second stage of funding, garnering between $20,000 and $80,000 more for their projects.

Ten outside ideas entered at the $50,000 level of funding each, three of which went on to be funded at $150,000 and one business reached the $500,000 level of funding.

Start Garden also has 30 ideas currently funded at the $5,000 level.

State of Start Garden

DeVos said Start Garden has exceeded his expectations in his first State of Start Garden address on Thursday morning at the fund's headquarters in downtown Grand Rapids, at 50 Louis St..

“In the beginning, we imagined Start Garden as a three-year experiment. We’re at the end of year one,” he said. “After three years, our goal is to have about one dozen companies that we own a percentage of, performing extremely well and showing signs of growing exponentially in value. If that happens, it’s evidence that the experiment is working, and we can potentially get going on another fund.”

Here’s his reasoning: Start Garden spends $500,000 to buy 20 percent of a company that’s worth $2 million in 2013. In 2018, if that company has grown to be worth $20 million, Start Garden’s 20 percent has grown to $4 million.

“Over the next seven to 10 years, we make money when a handful of our portfolio companies grow financially,” he said. “We put a lot of money in the first three years, and even though we’re only one year in, we really like the way things are shaping up.”

"Culture building"

Start Garden works, because it balances its function as two separate businesses operating in tandem, DeVos said: culture building and investment portfolio building.

By becoming a platform that spins out new business experiments every week and brings in experts to work side by side with entrepreneurs in cultivating the ideas, it creates profit and culture change.

“Culture building is why Start Garden feels like an economic development project, something that exists to create a social impact. Portfolio building is why our monthly Update Nights feel like ‘Shark Tank.’ We debate whether we’re working with an entrepreneur and if their business can become a high-growth investment,” DeVos said.

“Now if you imagine that we remove the portfolio-building part and just leave the culture-building part, there’s still a fundamental problem," he said. "Entrepreneurs in the Midwest need to cross the zero-to-$500,000 gap. It’s the earliest stage startups need to cross to prove they’re ready to scale, attracting new investors to grow further. But if we make Start Garden just about portfolio without culture building, we lose the vital people, social connections and business connections absolutely necessary to make startups grow.”

Michigan was the “primordial soup of the tech industry, when the tech industry was pistons and crankshafts fueled by gasoline" and has developed mature industry consolidation, DeVos said.

A few large companies grew to the point they absorbed or put out of business hundreds of small players taking their shot at becoming the next American automobile maker.

This, however, created a culture shift that obsessed with the power players and ignored or ostracized smaller businesses and startups, he said.

“Unfortunately, what happened in the corporate world has also happened in our culture," DeVos said. "Being part of a big thing was more valuable than tinkering on small things. Being chosen for a job was more valuable than making our own job."

“There’s absolutely nothing wrong with jobs, but that new culture suddenly looked down on people who tinkered," he said. "That was the shift that really hurt. . . . As time went on, this led to real problems, because big companies grow out of small projects. Start Garden is looking for business models with big, game-changing innovations. However, these innovations really need a culture that’s friendly to tinkering.”

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